This is the second installment in an ongoing series about cryptocurrency investing. You can view Part One at https://steemit.com/bitcoin/@johnphoenix/the-gordon-gekko-guide-to-crypto-part-one-no-one-likes-a-cry-baby
Today's crypto lesson courtesy of Gordon Gekko is:
I look at a hundred deals a day . I pick one.
- Gordon Gekko
There really is no way to adequately describe the explosion of digital currency. There is a new ICO announced almost every day. Most of these cryptocurrencies will not survive over the long haul, yet they are tempting as investments during an ICO because the market has produced many examples of tokens that generated huge enthusiasm in the early stages. Remember, you're dealing with a market that includes a token which features a dog as its mascot and was started as a joke. For a while the joke reached a $2 billion dollar market cap, prompting even its creator to ask, "What in the hell is happening here?"
Getting caught up in every new coin that comes down the pike is going to become expensive. Your strategy needs to be one of serious evaluation and discretion. Maybe the latest token will become another Bitcoin, maybe it won't. You can't profit by staking them all with a big ICO purchase. How many times have you jumped on a bandwagon without even researching an asset? Have you read the whitepaper? Did you look for news items that could provide clues? Smart investors don't blindly pursue investments.
Diversification works well as an overall investment strategy, but some cryptocurrency enthusiasts take it to the extreme. They think they need to have their finger in every pie. It's not so. To paraphrase another Gordon quote, some digital tokens are nothing more than a dog with fleas. You need to avoid them or pick the dog with the least fleas. It's that simple.
Pick your spots. Narrow your interests. If you think someone can just sit down and start buying tokens as a means to riches, you're mistaken. Work is required. Research, reading, and listening to the wisdom of seasoned investors are all important.